ALERT: New Ruling On Compensation For Discharged Employees

 

Massachusetts law now mandates that employers must provide treble damages, attorneys' fees and court costs when discharged employees do not receive all wages owed, including accrued vacation, on the day of discharge. Resigning employees must receive full payment by the payroll period next following their resignation.

 

On April 4, the Supreme Judicial Court (SJC) found for a discharged employee who did not receive her accrued vacation pay of $8,952 until three weeks following a termination for larceny. One year later, suit was filed. Beth Reuter v. City of Methuen, SJC-13121. The Plaintiff was awarded treble damages (3x the vacation pay). Her attorneys are demanding $75,695 in fees and costs.

 

The SJC noted in its decision that in Massachusetts, the term "wages" includes oral or written commitments for paid holidays, vacations, or commissions. Therefore, if a suit is filed following discharge, all may be tripled. Because attorneys' fees often far exceed trebled wage payments in these cases, this decision creates a fertile new area for plaintiffs' attorneys.

 

State law provides only four defenses to failure to make timely payment of wages: 1) attachment by trustee process, 2) valid assignment or valid set-off, 3) absence of the employee at the time of payment, or 4) actual offer of payment to employee.

 

ACTION STEPS:

1.    If unable to provide an employee with all "wage" payments on day of discharge, delay discharge by suspending the employee.

2.    Audit your payroll against the commitments used in company bulletins, offer letters and employee handbooks to ensure that all wage payments both completely mirror company commitments and comply with the law.

3.    Write or review commission plans with assistance of counsel defining the times on which commissions are "definitely determined and have become due and payable."

 

ALSO REMEMBER:

1.    In most instances, to be timely paid, wages must be paid weekly or bi-weekly to within six days of the pay period during which the wages were earned.

2.    Prior to commencement of Prevailing Rate work, submit questions on correct classifications and rates to the Department of Labor standards.